K-3

[fred1986]

I have a client that has Box 16 checked and no K-3 provided (until maybe August). Line 21 of the K-1 is blank and there is nothing in Lines 20AG and 20AH5. The taxpayer is a domestic filer from NJ.

Do I really need to wait for the K-3 to file his return or can I simply uncheck Box 16 and file?

By unchecking Box 16, would the only downside be that the taxpayer wouldn't get any foreign tax credit, if any?

[AliciaP1]

Yes, you can still file the return by unchecking the box, but there may have to be an amendment filed when the K-3 is available.  The IRS announced on February 15, 2022, that most K2/K3 reporting for 2021 can be delayed until the 2022 tax return filing, but they have not reported how taxpayers should proceed.  

Per the IRS:

The IRS intends to provide certain additional transition relief for this year from the Schedule K-2 and K-3 reporting for certain domestic partnerships and S corporations with no foreign activities, foreign partners, or shareholders, and without knowledge of partner or shareholder need for information on items of international relevance. For 2021, these qualifying domestic partnerships and S corporations will not have to file the new schedules. We are taking this step in response to feedback we received from the tax community and our stakeholders.  The IRS will provide full details of this relief soon.

@clnewha1

@fred1986

[fred1986]

You mention amending the filed return if the K-3 comes out and has info on it. Is it correct to say that the info on the K-3 is used to calculate or adjust a foreign tax credit?

Based on the blank boxes on the K-1, it doesn't appear that the K-1 issuer has any/much foreign info to provide.

Fred

[MarilynG]

Yes, the K-2 and K-3 info will be related to foreign income and foreign tax.

For 2021, eligible passthrough entities with no foreign activities or foreign partners/shareholders and without knowledge of partner or shareholder need for information on items of international relevance will not have to file the new schedules. 

Click this link for more detailed info on Forms K-2 and K-3.

[BrentV2]

Still not clear to me... For me, box 21 is empty (so are boxes one thru 5)...  Box 20 reports A: 11 & AG: 51

If I elect to mark that box 16 is not checked how will I know if I need to amend later?

Thanks!

[PatriciaV]

@BrentV2

If you have Schedule K-3 and it doesn't report any foreign activities, you aren't necessarily required to include the K-3 on your return.

Have you tried entering that info with your K-1? Some of the K-1 interview pages now have questions for entering the K-3 info.

But if you e-file now without the K-3 info, wait until you receive your refund or after June 30, 2022, to try amending your return.

[marcfabbo]

How do I tell If my K-1 does not report foreign activities as mentioned below? Is it box H1? Or something else?

Marc Fabbo

[DaveF1006]

To clarify, is your K1 from a partnership (1065), S-CORP (1120S)?

@marcfabbo

[marcfabbo]

Yes, I am not going to get a K3 until August......so at the moment I am thinking I will file with box 16 unchecked and file an amended return later.....I am assuming that the purpose of this is to determine if I get any credit for paying foreign tax....is that correct?

[marcfabbo]

Whoops didn't see the second half of your question 1065 is correct

[marcfabbo]

1065

[marcfabbo]

@DaveF1006

It is a 1065 partnership. I am not going to get a K3 until August......so at the moment I am thinking I will file with box 16 unchecked and file an amended return later.....I am assuming that the purpose of this is to determine if I get any credit for paying foreign tax....is that correct? Is there anything else I should know? Thank you for your help.

Marc

[DaveF1006]

Yes, a K3 reports a partner's share of international income, deductions, credits, etc.), if the partnership has relevant international tax items. If there was foreign tax paid on these items, you may be eligible for a foreign tax credit for a portion or all of the amount.

@marcfabbo

[marcfabbo]

@DaveF1006 Thank you!

Marc

[The Bippus Crusader1]

TurboTax Form K-3 for Form 1120S should support multiple country codes.  At this time, it seems that only one country code at a time can be selected.  Am I missing something?  If the K-3 I was provided has multiple country codes, how can I enter the data for such on TurboTax K-3?

If it is not supported now, will it be supported for 2021 taxes in the future?  If so, when?

I am using the CD version of TurboTax Deluxe for 2021 taxes.